Dear Sir,
I would like to know that any legal obligation raise when we bifurcate salary 40% Basic + 60% Allowance.
We want to pay all contribution on Basic Salary. e.g. PF, PL Encashment, Gratuity, etc..
If yes, which are??
Best regards,

From India, Ahmadabad
Can anybody provide me latest minimum wages for security services from 01.10.2013
From India, Visakhapatnam
Dear Parimal
There is no legal obligation for the bifurcate Salary, but there is some caring point for that. Like
1). Please make sure minimum wages according to State by State.
2). If u make base CTC, Basic should be 40% of CTC.
3). If u make base Gross Salary, Basic should be 60%.
4). Leave encashment depend upon no. of El/PL.
5). Gratuity 4.83% of Basic

From India, Faridabad
Whatever may be your bifurcation of salary. you need to ensure that it does not fall below minimum wages and that P.F Contributions are payable on Basic +DA +retaining allowance, ESI is payable on Basic + other allowances(gross) except travelling allowance and gratuity is payable on Basic + DA.

From India, Mumbai
Yeap, Mr. Sarvesh is absolutely right... Min. wages vary from state to state.
You may find the latest revision of min. wages by contacting at the concerned Labour Department / Labour Commissioner office. There are two components in the Min. wages. 1. Basic pay, which revises bi-annually and 2. VDA, Variable Dearness Allowance, revises once in 6 months. The VDA is calculated on the basis of CPIs (Consumer Price Index).

From India, Hyderabad
Dear Parimal,
Please note, you can't bifurcate Minimum wages, minimum wages always treated as Basic Salary/wages so all liabilities like PF, ESI, bonus and gratuity are payable on minimum wages.
Thanks and regards

From India, Jaipur

No where in the law says about bifurcation of salary. Few things you have to ensure is PF is paid for minimum wage and ESI is paid for gross. Your breakup could have Basic, HRA,DA, n number of allowance. There is no restriction in splitting. But ensure you are paying all statutory payments as per the local law. other than this, Gratuity, Bonus should cover Minimum wages. Leave's depends on the categories. For worker's catergories, its better to pay in gross.

Dear Friends,
Please find attached a copy of minimum wages notification of Rajasthan state implemented on 01.01.2013, please refer to the pint no.6 of page no.9 it is clearly mentioned that the sub total of Basic+DA can n't be less than minimum wages.
Thanks and regards

From India, Jaipur

Attached Files
File Type: pdf Minimum Wages 12 proposed notification.pdf (174.9 KB, 592 views)

Dear Parimal,

It appears from the post that you want to separate the salary block into Basic, DA etc and want to contribute only on Basic. So you are asking whether there will be any legal obligation.

This question is asked in many posts by many angles. So I thought to give a detailed reply:

(Figures imaginary and are for illustration only)

Assume Minimum Wages are Basic= 4,000, Special Allowance= 2,000 and HRA (@ 5%)= 300.

Gross Wages (B+SA+HRA )= 6,300

Empr's Contribution of PF will be on Basic and SA = 12% of 6000= 720.00

Employer's Contri. on ESI on Gross = 4.75% of 6300= 299.00

Case 1: Employer's Trick of flouting PF

Basic =1000, DA= 1000 and HRA @40% on Basic and DA = 800, Allowance 1 @50% =1000, Allowance 2 @50%= 1000, Allowance 3 @ 50% =1000 and Allowance 4 @ 25%= 500.

Gross= 6,300

PF only on Basic and DA= 240

ESI on Gross= 299.

The difference of PF in the above calculations is (720-240)= 480

If we consider the purposes of the PF Act, the trick of employer as shown in Case 1 will not work. Any thing below the MW for PF will not work. Employers should avoid fouling with PF act and should have a policy of proper implementation of PF scheme.

I hope I have answered the query

Adv. K. H. Kulkarni

From India, Kolhapur
There is nothing as 40-60 rule for Basic by law. Basic should be at least min wages as declared by State from time to time.
Higher the basic higher is the benefit for an employee and higher is the CTC - outflow on PF, Gratuity, Ex Gratia....increases the CTC
Diwyesh Dave
D'HUBB HR & Business Solutions

From India, Mumbai

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